Poll tax dies but haunts democracy: The damage to councils will be difficult to repair, argues Jack Straw

RICHARD II almost lost his throne. Charles I lost his head. Margaret Thatcher lost her job. Nevertheless, the history of the poll tax is not a happy one. It led directly to the greatest medieval uprising in England, the Peasants' Revolt of 1381. And the imposition of a poll tax by the Long Parliament in 1641 did nothing for the reputation of the government nor for the idea of the divine right of kings.

On the penultimate occasion that a poll tax was levied, in 1698, Henry Fox, a future Secretary of State and Leader of the Commons, commented: 'What minister would presume again to suggest the hated . . . poll taxes of the reign of William III.' Fox had spotted that the skill of government, especially in matters of taxation, was to divide and rule; to ensure that any complaint against taxation in general was muted by tax burdens that varied according to status, income and economic activity.

Three centuries on, however, their critical faculties dulled by triumphalism, the Conservatives spurned the sage advice of Fox and reckoned that it could ignore the lessons of history.

The claims made for the poll tax, just five years ago, are stunning in audacity and naivety. The poll tax was the 'fairest system of all', the then Local Government Minister, Michael Howard, proclaimed in a speech to his Folkestone constituents in February 1988. The poll tax was 'a prize within our grasp', he told Conservative Newsline, the party's

in-house magazine. And the National Association of Warehouse Keepers (whose concerns about government finance remain obscure) proffered the view that the tax would make local government 'more accountable and more acceptable'.

Mr Howard's most inadvertently perceptive offering was made in an evangelical speech to the Basingstoke Conservative Association Supper Club in February 1988. The poll tax, he said, 'will give power to the people . . . As local people grasp the significance of the new power we are giving them, they will not be slow to use it.'

The tax did indeed hand 'power to the people', but not in the way Mr Howard intended. No tax aroused greater hatred among the people, nor did more for their sense of power over government. No tax has ever forced a greater humiliation upon a government. No tax has cost more: pounds 19bn at the last count.

Formally, the poll tax will die today, but it will carry on knock-knocking from the grave. One in 12 local authorities estimated last July that they would still be collecting poll tax debts at the turn of the century.

The most surprising aspect of the whole saga, perhaps, is the placid response in England when the tax was first mooted. Though it appears an obvious and monumental folly today, its early passage caused surprisingly little trouble for the government. In Scotland, where it was already on the statute book, it was a big issue at the 1987 general election, and helped Labour to achieve record results.

In England, however, we in the Opposition could never make its prospective horror stick. In a Guardian article in late 1986, I warned that we had to 'wake up the nation to its full ugly implications', and that the government's record was of doing the 'immoral and the unthinkable'. Despite Labour's best efforts, however, few seemed ready to listen - until the bills arrived, and with them, a whirlwind of discontent.

In a direct sense, John Major owes his office to the poll tax debacle. Chastened by that experience, and probably by the growing chorus against the unelected quango-state over which he presides, he spoke last month of the 'importance of local government', and of how he looked forward to the Nineties as a period of 'renaissance in local government . . . rooted in civic pride, (and) in ideals of public service'.

The council tax, which begins its life tomorrow, is a property tax, but there is still too much of the poll tax left within it. The valuation bands are too broad and must be reformed, proper help must be given for the disabled, and the automatic discount on second homes must be ended.

But there can be no renaissance of local government without three other crucial changes.

First, the tax base of local government has to be broadened. Central government now directly controls 85 per cent of all local government's revenues through the revenue support grant and the national business rate. There never was a case for removing councils' power over the business rate; it should be

restored.

Second, councils must be given back their power to set their own local taxes - and to be accountable for them. Paradoxically, one of the strongest cases against rate-capping - the ceiling on local government spending set by central government - was made by Mr Major himself.

In a White Paper on public expenditure planning, published in 1988 when he was Chief Secretary to the Treasury, he said that central government should not even count local authorities' spending in the total for planned public expenditure, so long as it was self-financed. He said this would increase local responsibility and accountability, and drew on overseas examples: 'Very few other industrial countries plan public spending in this way (ie, through central control of local authorities' spending). For federal states . . . this would conflict with their federal constitutions. But even in other unitary states, such as France or the Netherlands, the government generally makes budgetary plans only for central government expenditure.'

He was right. Capping is not only undemocratic, it does not even meet its own economic objectives. In any one year, it has brought great disruption to some councils' services, and the loss of jobs. Over time, however, by making councils less accountable and encouraging councils that spend below the average to increase expenditure, it has led, as a study by the London School of Economics concluded, to 'higher spending by councils, the opposite result to that intended'.

Third, if councils are to be given back their power to set local taxes, they should be made more accountable for their decisions through the ballot box. Annual elections should be held in every council, with one-third of councillors retiring each year. The interval between a council's budget, its election and the setting of the local tax should be extended, to allow for real local debate about the balance between local services and tax levels.

Strong, autonomous, independent- minded local government is an essential feature of any vibrant democracy. The poll tax almost killed local government in Britain. But its health will not be restored until the Conservatives recognise that democracy is about spreading power, and allowing some of it to